Sunday Debate: Which Factors Caused HTC’s Woes?
Join us in a fun Sunday Debate on HTC’s situation. Come with your opinions and feel free to read some of our thoughts, then pick your side or play devil’s advocate to get your voice heard and engage in friendly discussion. You can read our food-for-thought or jump straight into the fray below!
HTC is underperforming, and there isn’t much of a way of denying this. In April, their revenue nearly declined 40%, plummeting after the HTC One M9 had settled in the market. The revenue loss was allegedly attributed to the M9, which was predicted to only ship 4.5 million units in the short-term, much less than the 8 million its predecessor shipped. It reportedly went on to ship 4.75 million in its first 3 months. Interestingly enough, reports have their Q1 (pre-M9) profits higher than last year’s… However, HTC expected $257 million in losses for Q2 2015, which is where most the M9’s influence laid. HTC was forced to write off $93 million due to unused production capacity alone. The M9’s sales can be felt by not only the company itself, but also some carriers discontinuing the phone.
With its stocks at an all time low, HTC can really use a boost. I personally strongly believe that they can achieve it. Their upcoming “Aero” phone is rumored to be the device that will pull them out of their current pit, and so far we’ve heard gossip about new camera technology, One branding and an October or November release, but not much else. Rumors are rumors, and reality calls for a great device. Facing this rough of a situation would force any company to do-or-die, and knowing their excellent track record with some of the best devices Android ever offered, we know they can certainly do. HTC’s current state is undoubtedly not a matter of just their actual flagship, however, and it rarely ever is with these companies. Manufacturing, production, line-up quantity and variety, marketing and much more can weigh on a company’s destiny.
Today we are framing an open discussion where you can tell us where you think HTC’s underperformance comes from, and why. Please try to look at their products/offerings and their situation as a regular user would as well, given that most consumers ultimately don’t know about many of the details behind the M9’s technical flaws. You can read some of our food-for-thought bullet points below or jump down to the discussion. So we ask you: what are the main reasons behind HTC’s financial situation? How are they connected? How much of the blame lays on HTC, and how much on external factors or partners? How can HTC address these issues, and how can they redeem their company?
Some points to consider:
- Flagship: The One M9: There is a lot to this device and many possible causes as to why it underperformed. As HTC’s biggest flagship, this phone had a lot of weight in their financial performance. The M9’s processor is known to be a problem, its battery life was not much better than the average, the screen regressed in various metrics, and the design stayed mostly the same. That being said, it is still a very good phone, casual consumers do not know much about these flaws, and we must keep in mind that reviewers – especially mainstream ones – gave the M9 overall positive reviews, and many defended the device’s issues (particularly the throttling).
- Context: The competition: Samsung and HTC have been going head-to-head at Mobile World Congress for a while, and this time Samsung made a much better impression with their S6 reveal than HTC did with their M9, according to both critics and users. Samsung went on to have a stellar release full of praise from the blogosphere, and sales seem to be some Samsung’s strongest in recent times. Given that the first few months of the year are typically strongest for HTC and Samsung phones in both journalistic coverage/hype and actual sales, Samsung could have overshadowed HTC and taken part of its spotlight.
- Marketing: Ads and Social Media Campaigns: HTC’s marketing campaign is full of ups and downs. They spent a lot of money on a deal with Robert Downey Jr. for a more esoteric ad campaign message, and this is reflected in many of their more tasteful and somewhat feel-good promotional videos, such as those shown during their MWC 2015 Utopia even. There are many ads to love from them, some clever, some funny, some great… but not always. Many of their other ads are rather tasteless and sometimes even nonsensical. A particularly weird and universally mocked ad is now set to private, but you can find a mirror here (you really can’t miss it). Marketing in social media didn’t go so well for HTC this year either, including an ad of their own confusing their M9 with the M8.
- Line-ups: Their Other Phones: HTC still makes a lot of phones — at least 43 from 2014 to 2015 according to gsmarena. The interesting part about their strategy is that while HTC made more phones in the past, it seems that their focus was set on their One flagship line. This past year we’ve seen many great, non-flagship devices come from HTC, many for very reasonable prices with understandable compromises (such as plastic bodies). However, we’ve also seen HTC milk popular lines – even their flagship line – in a rather-Samsung manner… as such, we have the One M8, One M8 for Windows, One M8 Dual SIM, One M8 Eye, One M8s, One M9+, One ME… While many of them have a valid target demographic, many can’t help but feel that it dilutes the value of their flagships.
- The Company Itself: Internal Changes: We obviously can’t talk much about these, as we don’t know what went down inside the HTC headquarters. But we do know that their lead designer jumped ship amidst the initial M9 concerns, and that shortly after the initial backlash then-CEO Peter Chou stepped down to focus on the innovation lab, and co-founder Cher Wang took over his position. Changes like this might have been determined before the M9’s lackluster performance, signaling internal changes inside HTC Corp. These could have influenced the misdirection the company has had through 2015 so far.
There are many more possible reasons behind HTC’s current financial woes that we didn’t list, so feel free to touch on them as well. In general terms, a company’s flagship, the rest of their line-up, the competition, context and marketing serve as the go-to factors to consider. But these are not the only ones, and it’s important to realise that for each company’s quarter each of these might influence the company differently. We also want you to take into account a possible long-term strategy HTC might undergo or be undergoing to turn things around. Finally, keep in mind that HTC is an experienced giant in this business and it has the resources and expertise to address all of this. With all of this in mind, we ask you:
- Which are the main reasons behind HTC’s situation?
- How are they connected?
- How much of the blame lays on HTC, and how much on external factors or partners?
- How can HTC address these issues, and how can it redeem itself?
- What do you expect out of HTC’s upcoming phones?